Brammo’s “Secret Sauce” and the Empulse

To echo the question of the day- how is Brammo able to break the 100mph/100 mile range for $14,000 and make a profit?

Here’s my theory. Interestingly, it’s summed up in the last line of the Motorcycle USA video below. Everybody was saying, give it more range and top speed, and you have something. Brammo said, OK, here you go.

I have a hunch (with a little basis, mind you) that they have made a big step in the battery supply chain, and it’s going to reduce their cost. This, again my hunch, may be some sort of agreement with a manufacturer to assemble proprietary batteries and BMS, and guarantee a certain number of units.

Now, most of the development of the frame and the supply chain for the rest of the components is in place. The electronics are designed and made (the startup even still says Enertia), all that R&D is done. Basically, the infrastructure is all in place, they’ve proved they can come to market with a viable product, and they need to go to the next level.

Zero does the same thing with their lineup- essentially the same basic systems, same components, just a different, well, “tuning” to give you a lineup of three bikes. Anybody who’s sold anything can tell you- it’s a lot easier to sell a line of products than one product. (And, yes. I fully expect Brammo to come out with a Quantya- type trail bike based on the Enertia.)

The second part- the order process. It’s all about backing up your talk with some good, hard numbers to your investors. In this economy, and from my very limited experience with VC and investors, they want guarantees. Nobody is going to throw money at something like this without some sort of “cash in hand”.

As a result of a really brilliant product launch- the key part being that there really is no product (Brian has said as much- the specs that everyone is so desperate to see simply do not exist right now)- Craig can go out and point to an astounding list of A-list media coverage, huge grassroots support in enthusiast groups, and a crazy pre-order list. Even assuming that there’s some attrition on the list, that’s your “cash in hand”.

As far as the pricing goes- I think you have two possibilities. If you think it’s about this product alone, then my guess is that it’s simply about scale, and mostly what I’ve outline above, and I think the concerns about delivery dates and meeting specs are right on point. However, look at it as a step in building a brand. The Empulse may very well be a loss-leader that buys Brammo a huge chunk of market share while everyone else is scrambling to even stay in the market. Hell, huge chink? It could well buy them the entire market. It may be a break-even product for them, it may be that they can spool up the frame piece-count and reduce a lot of the pricing for both bikes, or it may be that some investor sat down with Craig over whatever investors drink and said, great, show me what you want to do with this company, and I’ll write a check.

As of this moment, my opinion is that the bike is a concept, and as such is a complete home-run smash hit. There’s the danger that it’s a hail-mary (to continue the sports theme)… but I have complete confidence in Brammo as a company, and Craig and Brian as individuals who believe in fulfilling their promises, and I can’t believe they would make this move on a whim or with risk of not being able to deliver- I’ve got to believe that they have the deal inked. I have no doubt whatsoever that they could produce the bike as it sits with what’s in place, but I also think that if they make their numbers they can do it at the higher performance level they want, at a better price.